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- [00:00]
Unknown Speaker
Foreign.
- [00:10]
Brendan Veeman
Everybody. Welcome back to another episode of the Crypto 101 podcast. I'm your co host, although today, not accompanied by my notorious compadre, Mr. Brendan Veeman, got pulled into a few other directions. But man, I do have the, the sincere pleasure and privilege to be interviewing one on one here, Mr. Kyle Reed, head, who's the co owner and head of research at Milk Road and the co founder of Impact3. Kyle, thank you so much for joining me. And how are you doing today?
- [00:42]
Kyle Reed
Yeah, I'm great. Thanks for having me on. I really appreciate it. I'm excited to chat today.
- [00:46]
Brendan Veeman
Yeah, no, I'm, I'm, I'm actually, you know, quite a big fan of, of the Milk Road, you know, X feed and the newsletter and everything that you guys have been building, you know, from a guy who, you know, crypto 101. We do lots of crypto education, crypto research. There's not many other people out there that are doing as high quality stuff as you. Really, you know, high quality, but also very digestible and very approachable. And so, yeah, for all of our listeners, definitely, you know, I'm bringing on Kyle because he's got great content, he's got a great community, and I'm excited to learn about him and learn from him and I think everybody's gonna have a great time. So Kyle, let's just dive in here. Tell us a little bit about yourself and how you kind of came into, you know, building Milk Road.
- [01:31]
Kyle Reed
Yeah, sure. So I've been in the creator economy for a little over a decade, working with clients, building my own things for a while. And then back in 2018, I believe it was, I had my own like, online coaching business. So I had a podcast, I had a bunch of things in the health space. Cause I actually, I took kinesiology way back in the day.
- [01:54]
Brendan Veeman
Oh, nice.
- [01:54]
Kyle Reed
And, yeah, and, and I was investing on the side. I was like kind of early in, in like social media, investing in that side. Early in, like marijuana in Canada here it became legal like I don't know how long ago. Years and years ago. And it was like kind of early in that. Yeah, yeah, exactly. So I was kind of doing two things. I was building businesses in the creator economy, learning about how media works, and then was also vesting kind of in like newer industries, let's call it. And, and at one point I was like, you know what, I need to, if I'm going to be an investor, I need to really figure this stuff out. And studying like economics textbooks and like investing books and just kept reading, reading, reading. And in 2019, I met someone, I was living in Mexico who worked for Exodus, which is a crypto wallet. And they just went public, right? They just went public. Exactly. Yeah. So he was the head of marketing there, and we became good buddies in Mexico, and he told me where he worked. And I was like, man, I've been hearing about this crypto thing from, like, 2017 that. The notorious cycle. And I was like. But I never really got into it, never quite figured out what it was. And. And so he explained to me. We sat there, went for dinner, and he explained for, like three hours, got me a wallet, sent me some eth at the time, and. And I was like, wow, this is. This is wild. Okay, I kind of get it. But, like, you know, you never really quite understand it after. After just a dinner. So all of a sudden, I woke up, not too much, not too much later, and Facebook had banned my account. And I had, like, Facebook group with, like, 60,000 people in there. I had, like. My whole business was basically run on Facebook, and they just, like, deleted my account. And I had no idea why and still don't know why today. It's just gone. And it's like my personal Facebook account for when I had, like, you know, photos from a kid, stuff like that. So I was like, what the heck just happened? And as that happened, I had been learning about Ethereum, and I was like, the moment that happened, I was like, whoa, now I really understand what Ethereum is, what blockchain is, like, what crypto is doing here in terms of, like, owning your own data, owning your own accounts, not having to rely on. On, you know, big companies to do that. I understood the financial side, right? Bitcoin made sense to me. Ethereum, I was trying to wrap my head around. As soon as that happened, I was like, holy shit, I see it now. I see where this world is going. And I immediately was like, you know, I was running a marketing agency at the time, and obviously I was investing in this stuff, but I was like, I think the Internet's going to really change here, and I need to figure out how that's going to impact my clients. Right? All my clients have, you know, con. They're content creators, they're building digital products. So, like, they could have the same problems that I went through. And I could really see that, like, Ethereum Web3 was going to fix that. Now. This was back in, like, 2019, 2020. So it's very early days, but I started transitioning my companies into this space. And started to like dive into it further. And so it came out of like just issues I had in the Web two world of the traditional world that really happened to coincide the same time as I was learning the space. And that sort of like sent me off on a journey and sent me down that rabbit hole.
- [04:47]
Brendan Veeman
The mission is the boss and it.
- [04:48]
Kyle Reed
Cuts across the whole company. By organizing that way, we also created transparency. All these silos became porous, and when organizations are porous, it tends to be better.
- [04:59]
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- [06:43]
Brendan Veeman
That's. That's an incredible journey. And I. I love that you took a bad situation. And when life gives you lemons, you make lemonade, right? Like, you know, you're like, oh, my God, my whole business, my whole life, you know, your. Everything you kind of worked for, it just gets shut down because it's under some centralized control, right. And you just have. And it's. You know, you're not just the one case of that happening. It's.
- [07:05]
Kyle Reed
Oh, absolutely.
- [07:05]
Brendan Veeman
It's happened to many people. Right. You know, whether it's debanking because you relied on one bank or. Or anything, it's just, you know, I've definitely heard of stories similar. And, like, you're like, oh, wait, there's actually a solution to that. And it's crypto. It's decentralization. It's, you know, why does Facebook and all these banks and everybody. Why do they get to be, you know, the. The main authority of all, you know, all things. All things relevant? And why can't we kind of decentralize that power? And so it's really cool to see that you not only, you know, bounced back from that, but, you know, kind of bounce back and now probably feel pretty. Vint indicated, you know, building successful businesses now in the crypto space. But now tell us about Milk Road and kind of. Which came first? Was it Impact three and then Milk Road or vice versa? Tell us about what you guys are all working on there.
- [07:56]
Kyle Reed
Yeah, sure. So Impact three was first, which was the marketing agency. We've had that for a number of years. Started it back in. In 2019, and. And back then, after this stuff sort of happened and I started learning more about crypto, I started transitioning our clients. So we used to work with those that had, like, online courses, et cetera. We started moving it more into the crypto space. So our first client was Bankless. I'm sure many of your listeners have heard of Bankless before, so we really helped them grow back in 2020 from about 15,000 subs to over 300,000 subs. So they grew really, really fast because we brought a lot of, like, let's call it Web2Marketing tactics to crypto, which a lot of people in crypto weren't really doing. So from Bankless, we really started working with a bunch of other. And then we moved into actual protocols. Obviously, the strategies for protocols are a lot different, but we started to really understand the space as a result of working with those who were building the space, which was pretty cool at the Same time, when it hit about, I think it was mid-2022, we realized that there was, at the time, anyway, there wasn't a ton of media companies that either weren't super technical or super, like, finance lingo, right? Kind of. I'm sure a similar reason to why you guys started yours. Crypto101 is like, everything was like, technical jargon or, like financial jargon, and there's a lot of people in this world who just don't get that. So we actually started a company called Web3Academy, and this is a media brand that had a podcast, newsletter, whatever. We were growing quite well, and that was pretty good. But we were also working with Milk Road with our agency. So I didn't start Milk Road. There was another guy, Sean Pury, who did. He now runs my first million podcast, which a lot of people might have heard of. And anyway, he had sold Milk Road to some guys who were working with us, and they ended up buying it for the wrong reasons, didn't really want to continue it. And they asked us, hey, would you guys want to acquire this? You guys already have a media company that's very similar to Milk Road with products. We had, like, paid products. We had things that we were actually building, whereas they. They just had a newsletter, and. And then they knew we knew how to run newsletters because we had a marketing agency in the space. And so we were like, absolutely, we love Milk Road. Let's do this. So we acquired it over a year ago, and. And I've been building that ever since. Now we have impact, continues to grow and work with a lot of brands and protocols in the space. And we basically transitioned our old podcast and our old products under the Milk Road brand. And now we're kind of running with Milk Road, which has been a lot of fun. We love the audience in the community there at Milk Road. We've really helped to grow that and build that into something bigger. And our main goal at Milk Road is like, we. We want to help people invest in this space, but more so, I would say it's even more broad. We want to help people invest, right? We want to help people understand how to invest. And retail people, they often struggle with that. And so our goal is to help people invest, help them, you know, people come financially free. And we use crypto as a good tool for that because we think it's the best tool for that, not only in terms of making money, but also in terms of, like, saving, getting yield, you know, learning about financial instruments and the future of finance. It's all happening here. And so we really just, we love this space and we want to keep kind of proliferating it forward both through our marketing agency and through our media platform.
- [10:57]
Brendan Veeman
That sounds awesome. And yeah, like, as, as, you know, listeners that I think of crypto 101 people are looking for that same kind of stuff, you know, how to invest and just learning some of those first principles about, you know, what make, you know, good decisions versus bad decisions and you know, how to compound that. And yeah, I guess kind of like from, from your perspective or maybe from like the ethos of, of Milk Road and the researchers that you head up. What kind of is, you know, some of those, you know, what kind of are some of those, like first principles that you like to instill into the, the mind of your community, especially when it comes to crypto.
- [11:33]
Kyle Reed
Yeah, for sure. In terms of investing, do you mean for sure? Yeah, so we take a very long term approach, which I think is not like a lot of this industry. You know, there's a lot of short termism in this space. There's a lot. I want to get rich quick and we're trying to help people understand. You can try to get rich quick, but it's probably not going to work out for you, right? You're trying to buy a lottery ticket and that, you know, how often does that work? And so we try to help people understand, like, look, crypto is a place where the gains are incredible. It grows faster, appreciates faster than any other industry in the world. So like, it is amazing returns. But you need to do this long term. You need to compound your results year over year. And if you can do that, that's how you really end up making the money, right? Like if you look at any of the best investors in the world, Warren Buffett, et cetera, they didn't get rich in a day. Warren Buffett's been doing this thing for like 70, 80 years, right? It took him I think 45 years or something to become a billionaire and the guy's like 90 and still doing it. Like this is what it takes to really become a good investor is compounding results year over year. So that's the first thing we try to make people understand. The second is we try to help them build conviction. So like instead of just buying random tokens because someone told you to do it on YouTube, it's like, understand what these things actually are. What are we really building here? Which projects or which protocols and things are actually have product market fit, which ones are actually doing things good for their token. And not just like I have, you know, 10% of my token supply on the market and I'm just selling it every day. You know what I mean? It's like let's really think fundamentals here and think about what's really happening in the space. Which I think it's interesting. There's just not a lot of people that do that. People are more just like, oh, I heard this token, this one's got the narrative. I'm just going to buy that and invest in it instead. So again, kind of more zoomed out long term approach. Most of what we do with our community when we talk about kind of portfolio is like we're mainly in the majors and then we go and we play around in some of the smaller stuff because for me we know crypto is going to be, you know, is a huge thing and it's going to continue to grow just like you know, the Internet did over, over many, many, many years. And the good companies of the Internet, you could have bought them at any single time. And as long as you just kept buying them like Facebook or Amazon or Google or Apple, you could have bought them 10 years ago, 15 years ago, 20 years ago, 25 years ago, two years ago. And either way you're up, right? Because more and more people are coming online every single day. And there's more value being created online every single day. And so the big companies, the majors in the Internet world that have network effects, they're able to capitalize on that and keep growing. And that's why we have trillion dollar companies today. And we think the same thing is true here with crypto in the, in the on chain economy, more and more people are coming on chain every day. And so you can just buy things like bitcoin, which I know aren't sexy anymore. But so long as this idea of more and more people coming on chain every day is true, then the majors like bitcoin or eth or whatever, Coinbase is one of the majors I think of those are going to just going to continue to grow time over time over time. You don't have to go and find these like thousand x meme coin, right? It's like instead dollar cost average and think more long term and let's try to find the big winners over the next decade or two decades. That's where you're going to really create a large sum of capital rather than jumping in and out of trade. So that's kind of our, we're more of a slower, more boring approach to investing. We Often say like, less is more in investing. But I really believe that is the best way for most people, especially retail. Which are the people listening to these podcasts, they're the ones listening to TikTokers and YouTubers. The last thing they need is to be trading and jumping in and out of stuff. It's like, because it's not their full time job. Right? And so it's not your full time job. If you're not a pro trader, then you need to be thinking more long term and that's going to, the longer you stay in the game, the more you increase your chances of success. That's like the main thing I teach people.
- [15:11]
Brendan Veeman
Yeah, no, that's a, it's a great reminder that time in the markets is better than trying to time the markets. Right. You know, it's, it's very difficult to, to perfectly time the, the peaks and the valleys. But if you could just have, you know, proper risk management over the long term, you know, and compound those gains, that's where you're going to get the best results. And you know, as somebody who's spending all their time, you know, heading up research, what are some of the areas or maybe what, what kind of data do you look at if you're trying to evaluate, you know, what makes one crypto better than the other? For instance, everybody asks about, you know, Ethereum versus Solana and you know, how do you know, Ripple versus X, Y and Z? Like how do you kind of parse through some of that data and what do you find most valuable?
- [16:03]
Kyle Reed
Yeah, for us it's looking at adoption, right? So it's looking at, and when you think of blockchains, who's a blockchain's customer or who's a blockchain's user, it's not the average person, it is a builder, right. It is companies that want to build on top of there. Right. So when you look at adoption, it's not how many necessarily like active addresses are on there, it's how many active developers or how many active teams or how many businesses rely on these protocols. And so we're thinking more like network effects. Network effects to me is kind of the most important thing in any technology, especially platform based technology. And so as you named, which was a bunch of L1s, the way that you need to look at those is not necessarily by active addresses or you know, number of transactions, although those are of course important as well. It's how many people or businesses or developers or companies or governments now rely on that platform to do business. Or to do whatever it is they're doing, right? And so I know there's a lot of people that have gotten bearish on Ethereum lately because, you know, the values accruing to the L2s. But I think about it, it's like, well, all of those L2s, whether it's base or Inc. Or Sony or whatever, they rely on Ethereum. They need Ethereum to succeed for their businesses to succeed, right? BlackRock building on Ethereum. They need Ethereum to succeed for their fund to succeed. And this is a network effect, right? So although not all the value is accruing to eth right now, like, I don't think that these L1s are really valued based off fees because if they were, then they would all be extremely overvalued and none of it would make any sense, right? But they're valued as almost like, like digital real estate, right? Like these are, this is literally real estate for companies to build on top of. They put their smart contracts on there, they put liquidity on there. And so these things are all building on network effects. And so we look at a lot of the. It's tougher to track that stuff, right? There's not just like some website I can go to and see a live dashboard of how many people are building on Ethereum and how much, you know, how many businesses are building on Ethereum, etc. So it's really about staying in the know to try to understand that stuff. And then of course, the more people, the more businesses, etc. That are building on, you're going to have more transactions and more, you know, capital, liquidity, TVL et cetera. So like all that comes with it. But to me that's what I'm looking at. So when people say ETH is dead, I'm like, ah, doesn't seem like it's dead because there's so many people building there. So it's got something, right? And if you think about the way the Internet worked is there were a lot of companies, like Amazon for example, that built for a long time, not profitably at all. And it was like, what is this thing's business model? And no one knew, but it didn't matter because they were just attracting more buyers and more sellers on their platform. And now today, I mean they make billions and billions and billions of dollars, right? And so I think the same thing is true in crypto. It's like, yes, I know revenue matters or fees matter, but it's more like let's build network effects. And as they do that. They'll start to find more ways to monetize over time. Right. But it's again, long term here.
- [18:49]
Brendan Veeman
No, I love it. That's incredible. And I think you're the perfect guy to ask this as well because, you know, you came into crypto from a very principled perspective, like, hey, I got deplatformed. What if we could find a platform that everybody's equal and there's no deplatforming? And you know, and then you may be like, there's some level of, you know, distrust for centralized, you know, systems after like an experience like that. And I think everybody who's kind of come into crypto has, you know, a higher degree of distrust for institutions or the government or all this stuff because we're like, put it on a blockchain and don't trust, but verify. And so, and, and so what, what was really crazy to me and like, I'm still grappling with, in my own mind as a crypto investor and a believer is like, you know, five years ago we would like naysay like, you know, the institutions. Like bitcoin's not for the institutions, it's for like, you know, the person and, and you know, in a different world that doesn't have, you know, access to all the same banking infrastructure and all that kind of stuff. But you know, now we obviously have the institutions that are here, BlackRock, Fidelity, plus all the other guys that have these, these products and funds and stuff. Do you feel any level of like, you know, are you fully on board with like the institutionalization of the asset class or do you have some other take? I guess is, is a long winded way of asking the question.
- [20:13]
Kyle Reed
Yeah, it's, it's funny, you got the, the OG bitcoiners who just hate this putting, yeah, putting bitcoin in an ETF wrapper or having a government buy bitcoin.
- [20:24]
Brendan Veeman
Etc, they think it's like heresy. It really does remind me of like these church debates. Right, right.
- [20:29]
Kyle Reed
And it's like, well, how did we, how did you guys think we were going to get to this big. Like, if you, if you want bitcoin to go to a million, you're going to need the big capital to come on chain and buy this stuff. Right? Like, so what did you think was going to happen? For me, I think I'm fully supportive of institutions coming on chain because what really matters here is like, look, I see a world, I don't know how soon, but let's say in the, in a few years from now, where fintechs and banks, they are offering the services that Defi products offer via the Defi mullet. Probably it's like in your own bank, in your tallest Schwab account or whatever, you'll be able to take out loans and do all the things that Defi allows you to do, but you'll do it in your beautiful easy ux, in your bank account that you know you're already used to or your, your mom or your dad is already used to. They're not going to come and get a wallet and come on chain and like start using aave, right? But they will probably do these things. Yeah, yeah, they will probably do these things in PayPal or in, you know, Robinhood or Charles Schwab account or whatever. They will do it in there. And people like, well that's bad because now we're just like back to where we started, right? Now the banks own it all again. And it's like, yeah, sort of, but not really because here's the thing, most people were never going to come on chain and like get a wallet and start interacting with these DGEN D5 products etc, because most people just don't care, right? And so, but the beautiful thing about crypto and what we've built here with blockchain is you have the option to do something different. Right now in the tradfi world you don't have the option. Your only option is to use the bank, which means they control your money and they do it all and they charge whatever they want. There's no escape route. If you live in the us you can't go and use some other product. They don't exist. It's only controlled by the banks and even other countries outside of the US it's even worse. But what crypto's done is saying, hey, if you don't really care that much and you don't know how to go on chain and you don't care to go on chain, use the Charles Schwab, you'll still probably get better rates or maybe not. Maybe they won't even like pass through the better yields that Defi gives. I don't know. But you have the option if you want to learn to go and get on chain and custody it yourself and interact with the protocols yourself, right? And to me that's a huge unlock because one that's probably going to keep the corporations or the banks like more in check, right? Because they know that, oh, people can leave if they want. So maybe I do need to pass some of this revenue, some of this yield to. To our customers, which today they don't need to do. And if anything ever happens like Charles Schwab does something you don't like, just fine, just move your assets off and go on chain and custody your own. And that's great, too. I think what we're going to do here is build products for everybody, right? It's like some people want to custody their own assets. Some people, that's the last thing they want to do. And honestly, I don't want to force people like my parents, for example, to hold their own assets. They'll lose it for sure. They can't remember any password they create just to get into, like, any account they have online. It's the most difficult thing ever. Now, I want them to put their life savings in this thing and like, custody themselves. Like, no, it just, it never made rational sense. But I think there's people in this space that they don't care about, that they care about, you know, whatever happened in their life. And they're like, we've got to go fully this way and not this way anymore. And I think we'll meet in the middle and you can choose whichever side you want. And I think that to me is the end game. And I think that's the best case scenario for everybody.
- [23:29]
Brendan Veeman
I love that I. Super. Well said. And I definitely subscribe to, like, a similar mindset that, you know, the institutions are, are inevitable. Right. Like, one way or another. Right. You know, if you're trying to transfer from the old world to the new world, you kind of have to bring the old world with you in a sense. And so you, you know, you can't just completely ignore it. And it almost is like, I was thinking about it the other day. It's kind of like a Trojan horse, like with Bitcoin ETFs, right? Like, oh, they think, oh, we're going to bring in this bitcoin ETF and we're going to make a bunch of money off of it and so on and so forth. But, like, at the end of the day, they're, they're opening that sort of Overton window or like that, that, that, that the belief that like, oh, this stuff is real now, like BlackRock and Fidelity are doing, like the boomers, my parents, right, they're like, oh, we'll just do it in our, you know, brokerage accounts now and so on. And that, that now is like, legitimize the asset class. And that is an invaluable. You can't, you can't. Valuable. You can't value that. Like, it just, that changes the, the overall psychology and the market structure. And now we also have a president and an entire administration that is like, look, here's an industry that was very, you know, antagonized for lack of a better word and censored and so on. And I'm gonna like, you know, be all about freedom and choice and prosperity and is like, really boosting up this industry so much so that he's like putting out executive orders and hiring new roles for, for AI and crypto czar. Like, you know, this is not news to you, but for, for some of the listeners who are like, yeah, like I've heard, you know, you know, the president talk a little bit positively, but it's not just a little, little bit. It's like he's actually trying to accumulate strategically crypto for, for the entire country so that, you know, every, you know, every citizen in a sense has exposure to crypto. I mean, he really does seem like he's going all in on it. And then again, that brings out another cohort of people who are very anti, you know, governments owning crypto and stuff. But I'm kind of like in the same line, like, hey, if you want to really get to mass adoption, you have to go where the masses are. And that's currently, you know, you know, the government's control a lot. And so you again, Trojan horse, you kind of bring in that, oh, it's a really nice looking digital asset. It could really make us innovative, it could really boost gdp, could really make us competitive. And like, so. And then all of a sudden it's like, oh, wait, this is our own. This is like, you know, completely eating the system. But like, it's just so crazy, isn't it, like that governments are literally now talking about buying bitcoin. And here we've been writing newsletters for like six years and like, finally they're.
- [26:02]
Kyle Reed
Doing what we needed, right? We needed this to, to get the mainstream adoption. And I think this is, you know, obviously markets haven't done well since Trump has taken office, but I think that's more of a macro thing. I don't think that's necessarily anything to do with adoption. I think ultimately this is all really good for the space. And I mean, look at what's happened with the sec dropping every big case against every big crypto company right now. I think what we're doing here is releasing the hounds for innovation in crypto, right? Like, we've been kind of suppressed almost where we couldn't really Innovate Coinbase couldn't do a lot of things that it wanted to do. A lot of the protocols that were from the US couldn't launch tokens or couldn't launch token buybacks or couldn't add value to their tokens. We've been kind of stuck for a little while here and I think we're finally, and it's, it's kind of slowly starting because we got to get through some regulation stuff. But we're finally letting loose there and I think it's going to unlock so much innovation over the coming years and I'm super excited to see what that brings to the space.
- [26:59]
Unknown Speaker
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- [27:29]
Brendan Veeman
Yeah, I really am, I'm particularly excited to see what kind of innovation it brings to the altcoin space because it feels like we need, we need some kind of catalyst, right? Like altcoins are, you know, very speculative. They go up, they go down. Like they're up for like three months a year, they're down for nine months a year, whatever the, the cycle tends to be. But I think it's very much because of what you just identified is there hasn't really been, because of this really aggressive stance from the sec, everybody's been scared to like, you know, build in America or even, you know, allow American users or to have any sort of value accrue to their token, which is just so silly. And so I think that there's going to be a Renaissance, a D5 Renaissance, you name it, right? A renaissance across the entire altcoin market as, as they actually become, you know, categorized. Whether they're in some kind of, you know, sandbox approach that SEC allows or they register as securities, they register as, you know, some other thing. But like the fact that we're all just going to have clarity and start to get things sorted out, that could only be like accretive and like, you know, increasing the sort of future prospects for these things. So I think at some point here, within the next, I don't know, couple years, like we'll, we'll have some kind of defi Renaissance. Are you guys focused on defi and you guys, like, spend a lot of time analyzing that or, you know, do you guys kind of also look at other parts of the market? Like, where do you guys kind of, you know, spend a lot of time researching and discussing?
- [28:56]
Kyle Reed
Yeah, so we, we focus all over. We look for where the opportunity is. I would say, like, more broadening out for a second. Let's just zoom out for a sec. I think one of the big reasons why we haven't seen our huge, like, let's call it altcoin seasons. What a lot of people like to call it.
- [29:08]
Brendan Veeman
Yeah.
- [29:09]
Kyle Reed
Is we haven't really had that full risk on part of the. Of the cycle yet. And when I say cycle, I don't mean crypto cycle, I mean business cycle. And so we believe that crypto moves in similar fashion to the way most financial assets move, which is through the business cycle and through the liquidity cycle. A lot of people think that crypto moves based off the bitcoin halving, which I don't think is true. I think what happens is, you know, as the business cycle accelerates, meaning as economies expand, assets tend to do much better because more liquidity is put out around the globe. This is the same as how stocks go up and down. This is the same as how real estate goes up and down. It's like basically every financial asset does this. And in the back half of a business cycle, when there's more liquidity coming out, that's when risk assets do really well. So even in the stock market, you find, like, if we look at the last couple of years, the best performers right now have been the majors in the stock market, which is also true in the crypto industry in the later part of business cycle. That's when, like the Russell 2000, like the small cap stocks start to do much better, which again, lines up the same with when altcoin season typically happens. We haven't got there yet in the cycle. We're starting to get sort of close, although we've had some hiccups over the last month or so with Trump, the administration. And so they've got to get through some sort of macro issues around their debt deficits and stuff that we've got to work through. So I think it's. I think all that's still to play for probably end of this year into the next year in terms of when. When capital does make its way into. Into crypto. We actually are very bullish on defi. And the reason is kind of what you were just Saying how with the SEC kind of moving back a little bit, allowing tokens to start to like buy back their own tokens or to do certain things, we think this is going to play a big narrative. But more so. Defi is the 1 industry in crypto that's actually been around for multiple cycles, pretty much nothing else has. And it's also the only one, really, the only thing that has like product market fit. Like, I know AI agents are super exciting to people, but like there's nothing real there yet. There's hope and there's potential, but there's nothing actually real. Deepin, we're starting to get things, but it's still very, very early stage. Defi has been around for like five plus years. Things like Maker or aave, these things have been around for a long time. They've established products, they're robust, they've been through these crazy ups and downs. And so institutions, they're actually very likely to use this stuff because it's not, you know, been around for seven days. It's been audited, it's been through it all. And these things generate millions and millions of dollars in revenue. Like Maker, I think is currently on track for about close to 200 million annualized this year, which is huge. And AAVE is, you know, multiple millions a month it's earning right now. And the one thing to remember with Defi is they don't have a lot of expenses. They're not like a normal company that has 3,000 employees and, you know, an office in New York and blah, blah, blah, blah. Maker's goal actually for the end of this year is to have no core expenses. It's basically they're going to push it all out to the subdaos to manage everything. And so we might have a protocol in crypto that makes $200 million in a year and has zero expenses.
- [32:05]
Brendan Veeman
You're literally speaking my language. This is like the number one coin I've like talked about for years.
- [32:09]
Kyle Reed
Yeah, to me, I think that's absolutely nuts.
- [32:11]
Brendan Veeman
And full disclosure, I have exposure there.
- [32:13]
Kyle Reed
Me too. And, and so, you know, I think this is going to be one really exciting for, I mean, just crypto people in general to have this, this company or this app that's finally making money, doesn't have a lot of expenses, is buying back its own token. But that's also going to be very exciting to institutions and tradfi. And who are the people that are coming into crypto right now? Institutions and tradfi. There's not a lot of retail that Came back so far there was a little bit when Trump won, but like we've seen, it's more institutions, it's like smarter capital coming in and I don't think they're going and punting. Dog whiff hat. Right. Yes, there was some hedge funds, the crypto native ones that did that, but not much. I think they're going to come in, they're going to look for real earnings, real revenues, right, like product market fit. And I just think Defi is the only thing that's set up for that and they're the only ones with enough revenues to buy back their own tokens. And I think that's going to drive a really big narrative probably at some point this year. And so I think when we get our kind of bigger moment in this bull market, I think Defi is going to do quite well here.
- [33:08]
Brendan Veeman
I completely agree, great call outs and all that stuff. Just because, especially with a maker directionally bringing their expenses down to zero, even if it's not all the way down to zero. I like that direction and that the earnings are going to keep growing. And also one other point, it's like you said, they've been through a lot of the markets, but they've actually been through some really freaky times. For instance, makers withstood like the, the Silicon Valley banking crisis like through 2023. And you could actually see their governance like play out in the wild, like in emergency situations. Like what happens when 20 of your reserves become like irretrievable for an undefined period of time? Like how do we calm the markets down and, and how do we govern this like in a decentralized way? And that's the kind of, that like you just can't white paper out. You can't just like these are, this is code in the wild with real people that are extremely adversarial that anybody in the world can use. Like how do we steer this ship? And again, like, you know, we've talked about maker a lot, they've just executed it and they've, you know, done it through the, the Luna collapse when all the stable coins, you know, fluctuated wildly. They did it through the COVID 19 collapse when everything kind of went crazy and you know, collateral gets cut in half in a second. Like all that stuff. They've been able to not really, you know, accumulate bad debt and, and all that kind of stuff. And so it's interesting how it's, how it's all played out and I think yeah, the Defi is, is certainly primed for, for an awesome, awesome season here. Once, once the, the world kind of gets back on track and, and all that kind of stuff like you said, the debt situation kind of maybe they need to refinance at a lower rate and so they're maybe trying to crash yields and crash the markets. But it's temporary. All this stuff is temporary. And I loved what you said, like, focus on the long term. Anybody who's invested, you know, tells you there's going to be these, these cycles and stuff. And the best time to be a buyer is typically when it feels the scariest. And the best time to be a buyer is when you actually don't want to buy, you know, so. Well, tell us while we still have you got kind of like one last question before I kind of just, you know, wrap things up and find out, you know, how people could learn more. But what is, what's kind of one word of wisdom from a guy who's, you know, built businesses and successfully been in this market in crypto, what's just one word of wisdom to the, the, the average listener out there who's trying to navigate this space?
- [35:34]
Kyle Reed
Yeah, good question. I mean, it goes back to what we talked about the beginning, but like, think long term. One of the things I always say is just like zoom out and chill. I often end my like newsletters with that because, because so many people are so focused on like, you know, the hourly chart or the 15 minute chart on, you know, any random token. And it's like, look, this is a very, very volatile, volatile asset class. And you're in here because you want the volatility, you want the 10x, the 100x. Why most people are here in crypto, which I get, that's why I'm here too. But if you want something that's going to 10x, you've got to expect it to do 50% pullbacks or 60% pullbacks or more. Right? Like that's just part of the game. And I think a lot of people, they just sort of miss that. They're like, I just want my 10x and I want it now. And it's like, listen, you got to earn those 10x's or those twox's, like, I don't even like to say 10x because like most people aren't going to get a 10x like unless you're buying in the bear market, as you said, at the tough times. But for most people, it's like just zoom out. And if you just zoom the chart out, oftentimes, as long as you're Investing in good assets, not trash assets, then things look completely fine when you zoom out. Like, if you look right now, I know it feels bad. Bitcoin's 30% back. You zoom out, you put this thing on a monthly chart for, you know, for the last 15 years or whatever, and you're like, I don't even see a pullback here. You know what I mean? Like, what pullback? There's nothing there. And so for a lot of people, it's just like, zoom out and just like, think more long term and this is going to come way easier to you. And the other advice I'd give for investing is 90% of investing, in my opinion, is just mental. It's psychological, right? And if you can control your, your, your sort of, like, your emotions during, you know, volatile times, which happen often in crypto, you will do so much better. And so I often tell people to, like, get a journal and like, write how you feel when markets pull back and when markets do well. Because when markets do well, all of a sudden everyone's an investor. They're long term. You know, they're here for forever. They're here for the tech. And then markets pull back.
- [37:33]
Brendan Veeman
And everyone else reading my trading journal.
- [37:37]
Kyle Reed
Maybe, I don't know. But all of a sudden, markets pull back and everyone's like, should I sell? Like, and I'm like, well, now are you a trader? Because, like, two days ago you were an investor and you were long term, and now it's like, 20 pull, like you want to sell. And it's like, make up your mind here. Right? And so, but that's all just fear. And that's greed. And the fear and the greed just, they screw up everybody. And it's why I think humans are just actually naturally really bad at investing because we're really bad at controlling emotions. And so whether you're an entrepreneur again, entrepreneur, it's all about your emotions. You got to learn to just, like, grind through the difficult things. Investing, you got to learn to hold or buy through the difficult things. And so if you can figure out how to, like, manage your emotions, you'll be, you'll be a better entrepreneur, you'll be a better investor, probably be a better person. Like, I don't know, just like, it's the best thing you could possibly do, dude.
- [38:22]
Brendan Veeman
A better husband, a better friend. Yeah, all that stuff. That's, that's incredible. Word of advice. And. Yeah, just. Yeah, last thing. Just, you know, I think about a lot of times, you know, there's these dips, right? And it's like there's still all these institutions and deep pocketed family offices that have been doing their diligence for, for a year or two years since these ETFs came out. It's like they've probably been waiting for a pullback. They're the ones probably buying, you know, patiently with their orders, set whatever below the price right now, waiting for the market to kind of come to them. And the ones selling are like the people that bought at 100k. They're like, oh, I thought this was going to go to a million dollars this year and now it's already down so I'm going to cut my loss. It's like you want to be buying with those long term people who like to buy on the dips. You don't want to be buying when prices are already going high. And it's like everything you said just kind of like spoke to that and brought that up in my mind.
- [39:12]
Kyle Reed
Yeah, absolutely. It's tough, but that's, that's the key to success.
- [39:16]
Brendan Veeman
Yeah, exactly. Well, hey Kyle, this was awesome and I really look forward to, to everybody at home kind of like listening to this and hopefully being able to go to your site to sign up for your newsletter and to get, you know, much more plugged into your community. Would you be able to let us know what your like Twitter handle are your, your substack or website or anything and then people who are listening. If you guys just want to click into the show notes, you'll be able to find all that.
- [39:42]
Kyle Reed
Yeah. Cool. So you can follow me on Twitter. I do a lot of tweeting on there or I guess on X. I do a lot of posting. It's IL Reidhead. So just my name again. You can find it linked. If you want to learn about our investing insights and follow us in Milk Road, just go to milkroad.com and then if you're a builder in the space and you're looking for help with marketing, you can go to Impact3Co and we do a ton of stuff there to help on the, on the growth and marketing side as well.
- [40:07]
Brendan Veeman
That's awesome. Really appreciate it. And everybody please go check it out. You will not be disappointed. It's some incredible content. And Kyle, until next time, thanks for joining.
- [40:17]
Kyle Reed
Thanks a lot. Appreciate it. It's a good time.
- [40:29]
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